IG10004 — Community Banks

Prepared by Sean M. Hoskins and Jamie Hutchinson For more information, see CRS report to R43999, An Analysis of the Regulatory Burden on Small Banks. Sean M. Hoskins, Analyst in Financial Economics, shoskins@crs.loc.gov, 7-8958 COMMUNITY BANKS Less than $1B More than $100B Small Business Loans 13.3% 1.6% Farm Loans 2.9% 0.1% Mortgages 13.2% 19.9% 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 WHAT IS A COMMUNITY BANK? A community bank is a small bank that typically engages in traditional activities such as accepting deposits and making loans, but there is not a single, Consensus definition of what makes a bank a community bank. Some define community banks solely based on their size, often using $1 billion or $10 billion in assets as a threshold. Others emphasize the bank’s business model in their definition. SIZE OF SMALL BANKS To provide some additional perspective on the size of small banks, it is informative to look at the average Number of employees at banks of different asset sizes. Congress has focused on community bank issues for multiple reasons, one of which is because community banks are Disproportionately engaged in certain activities that are of particular importance to some Members. As a share of their total assets, small banks are more likely to fund mortgages, small business loans, and farm loans. CONGRESSIONAL INTEREST Some Members are worried about the future of community banks, noting that the number of banks with less than $1 billion in assets has decreased signi_cantly over the last several decades. DROP IN NUMBERS Others point to the drop in the percent of Institutions that are unprofitable as a sign that Community banks are doing well, even though the number of community banks has fallen. Assets 67% Decline $100 million bank 25 $1 billion bank 214 DROP IN UNPROFITABLE INSTITUTIONS Employees $10 billion bank 1,173 Share of Total Assetts 0% 5% 10% 15% 20% 25% 30% 35% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 /

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